In his showdown with striking school bus workers, Mayor Michael Bloomberg has repeatedly cited what seems like an astronomical figure: yellow bus service costs, on average, $6900 per child a year. That's twice as much as Los Angeles spends per child.
The reasons are complicated. But they have to do with an industry that's enjoyed an unusual monopoly for decades, as contracts got renewed again and again without competitive bidding; a union whose former president was sent to prison because of ties to organized crime; the growing number of students who depend on busing; and school bus routes that are considered highly inefficient.
There's a long and storied history of scandals in New York City's school bus industry. In 2008, the former president of Local 1181 of the Amalgamated Transit Union, Salvatore "Hotdogs" Battaglia, was sentenced to four years and nine months in federal prison for racketeering. Battalglia admitted to taking payoffs from Genovese crime family members in exchange for agreeing not to unionize some of the school bus companies doing business with the city. Two other union leaders were also convicted.
"The union was found by federal prosecutors to be controlled by the Genovese crime family," said Richard Steier, editor of The Chief newspaper, which covers city labor. Local 1181 under new leadership but its president was on the same board that served under Battaglia.
In 2009, seven city Department of Education employees were sentenced for taking bribes from bus companies, in exchange for looking the other way during inspections and giving them more lucrative bus routes.
"They've managed to prosper in return for making those payoffs," said Steier, of the bus companies. "So it's been pretty much a business arrangement rather than a question of victims."
Bus Contractors Under Scrutiny
Four of the bus companies that were investigated in connection with the bribes continue to do business with the city. No criminal charges were brought but the companies must pay for an independent monitor. These companies include Jofaz Transportation, which currently has $318 million in contracts with the city, and Logan, which has $340 million. The Logan family owns a few other companies that have city contracts.
The Department of Education said Logan and its affiliated companies "have consistently provided safe and timely transportation" to city students. Logan and Jofaz were given two-year contracts in 2010 instead of the usual five.
One of the companies that was investigated for paying off Battaglia is Atlantic Express. Its owner, Domenic Gatto, claimed he was a victim of extortion and his spokeswoman noted that the U.S. Attorney acknowledged that was true, in open court. He was never convicted or implicated in any crime.
With all these problems, the obvious question is why the city continues to renew its contracts with the same bus companies year after year. More than 40 companies have contracts with the city. The city hasn't bid out the contracts since 1979, when it ended the last bus strike by agreeing to employee protections.
The biggest school bus contractor appears to be Amboy Bus Company, which is affiliated with Atlantic Express. Amboy has $2.3 billion worth of contracts with the Education Department. These companies along with their employees have made more than $47,000 worth of donations since 2000, state and city records show. Atlantic Express spent $20,000 lobbying the education department last year and $25,000 lobbying city council members.
Steier, of the Chief, said Gatto and his companies enjoy "most favored nation status" because of connections to the Staten Island Republican party. In a particularly colorful episode, Gatto pulled out a gun once during negotiations with the city, though his lawyer said he was just illustrating a point.
Many observers believe the city was afraid to bid out its bus contracts because of what happened the last time it did that - the 1979 strike lasted three months. Officials don't want to disrupt services more than a 150,000 students who depend on yellow buses.
Where the Money Goes
In 1980, the city spent $71 million on pupil transportation. Those costs ballooned to over a billion dollars last year. The number of students taking yellow buses has soared since then but the city still believes this price is much too high, because it translates to $6900 per student.
Local 1181 insists its members aren't benefiting tremendously from that price tag. John Tomblin, who's been driving a school bus since 1978, said he made $257 a week back then. Today, he said he makes more than four times that figure but it hasn't kept up with the cost of living. He lives on Staten Island. "It's $1200-1500 a month for a two-bedroom," he said. "Every day life costs a lot of money from 35 years ago."
The top salary for the union's bus drivers is now $55,000 a year. That's about the same as MTA bus drivers.
Lee Adler, who teaches collective bargaining and labor law at Cornell University's School of Industrial and Labor Relations, said Local 1181's history of corruption hasn't led to higher pay for its members. Average salaries are about $35,000 according to the union. "They seem to be not exorbitant and not out of whack with what I understand to be the wages of transportation persons in the greater New York City area," said Adler.
But base salaries are deceptive said Elizabeth Lynam, vice president and director of state studies for the Citizens Budget Commission, who published a report on the costs of pupil transportation in New York State. She noted that school bus drivers in Local 1181 get nine weeks of unemployment during the summer from the bus companies. "That's extremely unusual for school employees," she added.
The school bus companies claim their rate structure is only adjusted for inflation and doesn't keep up with the rising costs of fuel and labor. The coalition of about 20 companies that employ Local 1181 drivers said 80 percent of revenues received from the city go to employee salaries and benefits.
Companies also claim the employee protection provisions (EPP's) put them at a disadvantage. If one company goes out of business, whatever company picks up its business is required to pick up displaced union workers and pay them at the same rate. The union argues that these protections guarantee an experienced, safe workforce. Though the city says any workers who are hired to drive buses and escort students will have to be properly trained.
The Department of Education cites its pre-k bus contracts as evidence that competitive bidding can work. It says it saved $95 million over five years when it bid out these contracts in 2011 without the EPPs.
The Route of the Problem
But labor is just one area for potential savings. Lynam and others believe the city needs to make its bus routes much more efficient, because too many buses are driving around with just a few students on vehicles that could transport more than 60.
The city currently has 7000 bus routes, more than twice as many as in 1990. About a third of the students who take yellow buses have special needs. These students are the most expensive to transport because they require escorts, or matrons, and door-to-door service. Some attend private schools in Long Island or Westchester at city expense because there are no appropriate public schools here that can meet their needs.
There are also more general education students taking yellow buses. Mayor Bloomberg's administration has opened about 500 schools over the last decade in an effort to give families more choices, whether in their own neighborhoods or elsewhere.
The city tried restructuring its bus routes in 2007 but that proved to be a disaster, with children stranded in the winter cold. Lynam, of the Citizens Budget Commission, said reforming the routes will be key to long-term savings. But it's complicated. If drivers start earlier in the day, to pick up more children, that means working more hours.
"Should they pay overtime? What's the best way?" she asked, acknowledging reform will involve lots of difficult questions.
But the complex logistics are among several challenges to overhauling the school bus industry. As he enters his last year in office, Bloomberg said this week he wished he had tackled the issue earlier in his tenure.
With reporting by WNYC's Robert Lewis